LAS VEGAS -

The dealership of the future, advancements in fintech, digital auction sales and economic indicators to watch were among the many topics on the table during the various panel discussions that took place at Used Car Week, which was held Nov. 11-14 in Las Vegas.

Here’s a glimpse of some of those conversations.

Dealers in the next decade

Dealership managers and a manager of one of the nation’s largest selling certified pre-owned brands, took a shot at predicting how the retail auto industry will evolve over the next decade  during the panel discussion: “Dealers in Focus: The Next Decade.”

“Dealers that decide not to rely on ‘this is how we’ve always done it’ will have the opportunity to have the biggest impact in the next decade,” said Nick Johnson, pre-owned director at Luther Automotive, in Minneapolis.

That might call for dedicated staffs to carry out specific duties such as adopting new technology, broadening a dealership’s reach and securing the right inventory mix, he said.

“Maybe have a lesser footprint of new-car inventory and a wider (footprint) of used-car inventory and personalized experience,” Johnson said. “I also believe that those groups that can separate their recon out of their shops can increase their customer pay and retention models.”

Ron Cooney, sales operations manager at Toyota Certified Used Vehicles, said used vehicles will continue to play a big role in keeping dealerships competitive, because they enhance other profit generators such as customer retention and new-vehicle sales.

“For every 10 TCUV leads that result in a sale, four are actually on a new car,” he said. “So when you accept used cars as a way to bring people into your dealership and sell them anything when the get there, I think that’s a big part of the future.”

Ray Sanabia, general sales manager, Cavender Toyota, in San Antonio, believes the dealership model of the future will be shaped and handled by the dealership staffs of the future.

He said his store is paving the way by identifying and nurturing “this next sales generation of men and women” who have the “tools,” “drive” and “hustle” to figure out the company’s needs in the future.

Sanabia said he has worked at dealerships where talented people got “ripe, started to rot,” and took their talents elsewhere.

But at his organization, “we’ll tap people on the shoulder and tell them why they’re the best person for the job, and they’re next up before they ask for anything,” he said.

“They get to be part of a winning team, and they know their efforts are going to be rewarded.”

Fintech done efficiently and effectively

Smart investments in digital technology that allows mainstream financial tasks to be done more efficiently and effectively makes good sense, according to panelists who tackled the topic: “Insight from the Top: Industry Leaders Explore What’s Next for Auto Finance.”

Bill Jones, who is president CEO at Regional Acceptance Corp. and EVP/manager of dealer retail services at Truist, acknowledged that the indirect lending model used in dealerships is here to stay.

But he said channels such as direct lending and refinance are examples of “where digital can be leveraged in a more profound way that does not create conflict in the indirect channel at all.”

Examples of smart fintech investments are e-contracting; automated-decision making and using data to verify key parts of a transaction such as income and employment, particularly as it rates to subprime and near-prime lending, Jones said.

These examples aren’t provocative, but they are “solid mainstream-type things that can be done in a more efficient and effective way,” with technology, he added.

In 2018, TD Bank, based in Toronto, acquired Layer 6, an artificial intelligence start-up also based in Toronto, said Stuart. He said he couldn’t point to any AI that’s been implemented yet, but there are numerous opportunities in areas such as underwriting and auto-adjudication. “Imagine if you can get AI in there and reproduce the kinds of decisions that maybe an analyst might make on a manual basis,” he said. “Over time it could learn how to think, and you could probably increase your auto-adjudication level.

“It’s still early days, but certainly there’s going to be great opportunity within banking in general for AI.”

Virtual auctions: what dealers want

The merits of live sales of vehicles that remain parked and displayed on monitors in physical auctions — also called postcard and virtual sales — generated a lively exchange during the panel discussion: “Buyers and Sellers Perspective: Remarketing to Today’s Customer.”

John Manchin, national fleet remarketing manager, Subaru of America, said half of the auctions at which his company sells mostly late-model, retired rental and corporate vehicles to Subaru dealers, utilize postcard and digital sales.

But before he went ahead with the digital sales strategy, he ran it by his large buyers who gave him their blessings.

“A lot of my buyers don’t even show up at the auction, so the fact that we went to the digital world, postcard, has really worked out well,” Manchin said.

“It’s really nice when you go to Chicago in January for an auction and both doors are closed, and the heat is on and you’re sitting down, you’re not freezing and you’re selling cars.”

Tom Cornellier, manager of auction operations and e-business, vehicle remarketing, North American fleet, lease and remarketing operations at Ford Motor Co. agreed that it isn’t a question of whether the sales method is right for the company’s vehicles, but rather whether it’s right for the company’s buyers.

Ford and Lincoln dealers answered the question loudly and clearly, Cornellier said.

“We tried it in a couple instances, and I’ll tell you bluntly — I got my head handed to me,” he said.

“Ford and Lincoln dealers are influential dealers, and that relationship is taken seriously within the company. If this is something the industry wants to do, it needs to be more an industry initiative, an educational initiative, because we’ve got to bring — at least my buyers — along for the ride.”

Eyeing the economy

When it comes to probability of a recession, what are the economic indicators the auto industry should keep its eyes on?

Here are some answers shared by a group of auto economists who participated in the discussion: “Economist Roundtable: What Lowering Interest Rates & The Threat of Recession Means for Auto Values.”

• Tom Kontos, chief economist at KAR Global: “The fact that the labor market is still showing healthy levels of jobs. Paychecks themselves and income levels are going up at reasonable rates and not inflationary, necessarily, but providing the income necessary for people to make payments on new and used vehicles. As long as those fundamentals are in place, my sense of the potential for a recession is a little bit less.”

• Zo Rahim, manager, economics and  industry insights at Cox Automotive: “Used-vehicle values tend to turn before a recession, and that downturn trend continues for a couple of months before we classify ourselves in a recession. That’s because used-vehicle values are dependent on both supply and demand. When demand exits the market” and “supply sits, that starts to deteriorate used-vehicles prices.  We haven’t seen that yet.”

• Michael Brisson, lead auto economist, Moody’s Analytics: “With (President Trump) being so concerned with the stock market, we’re really concentrating on what the stock market is doing more than ever. We’ve had more people invest in the stock market than any time in history. Sixty percent of all spending in the U.S. is done by the upper quintile of U.S consumers. Right now we have consumer-driven expansion.”